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tv   Nightly Business Report  PBS  February 17, 2011 1:00am-1:30am PST

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the central bank expects the u.s. economy to grow as much as 3.9% this year. just a few months ago fed policymakers were forecasting 3.6%. >> susie: tom, the new forecast was part of minutes released today from the fed's january policy meeting. but there were no significant changes to the fed's forecast on jobs or on inflation. >> tom: nevertheless, the government's measure of wholesale inflation rose in january. the so-called producer price index jumped 0.8%. that's the seventh straight monthly increase. so do we have an inflation problem? suzanne pratt reports. >> reporter: ask most wall street economists if the u.s. has an inflation problem and the answer is pretty much no. ask that same question of americans filling up their gas tanks or buying groceries and you get a much different take. >> like cereals, for instance. it's a joke. i used to buy cereal. it's just, everything it going through the roof.
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>> the prices are ridiculous. i mean like orange juice, milk. >> reporter: the disconnect between main street and wall street is simple. consumers pay most attention to the cost of everyday items. economists follow data that tracks a large basket of goods at both the retail and wholesale level. as it turns out, wholesale prices warmed up in january due to a big jump in energy, pharmaceuticals and plastics. but economist neal soss says there's little evidence producers are passing those higher costs onto consumers, other than at gas stations or for some select food items. >> my own expectations are that we are not going to see inflation accelerating in any important way over the next visible horizon of a year or two or three, as long as we have such a visible shortfall of gainful employment in our labor markets. >> reporter: for the most part, the federal reserve agrees. today, policymakers released their latest economic forecasts for the next few years, including a look at inflation. despite the recent jump in commodity prices, the fed still expects headline inflation to
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rise only as much as 1.7% this year. but, economist alan levinson says the fed should be paying more attention to the rising cost of food. >> if every central bank around the world is going to disown responsibility for commodities based inflation, it's going to become entrenched. to me that's something to worry about that might again bite us sooner than a 9% unemployment rate would suggest. >> reporter: something you don't need to convince consumers about either. >> if i get four bags of groceries, i've spent over $100. >> reporter: suzanne pratt, "nightly business report," new york. >> susie: here are the stories in tonight's n.b.r. newswheel: positive housing data helped stocks move higher. the dow rose 61 points, the nasdaq added 21 and the s&p 500 was up eight. trading volume dipped on the big board, with 926 million shares changing hands.
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2.2 billion shares moved on the nasdaq. a surprising jump in housing starts for the first month of this year. new home construction posted its fastest growth rate in almost two years, up 14% in january. but it came from a spike in construction of apartment buildings, up 80%. new home construction was down slightly. and industrial production dipped last month, for the first time in a year and a half. output at the nation's factories, mines and utilities fell 0.1%. >> tom: still ahead, with food prices picking up "street critique" guest hilary kramer checks in with an animal idea for your portfolio. she's editor of gamechangerstocks.com. >> susie: remember when free music was easy to find on the internet? now, most people pay 99 cents to download a song. the same transition from free to fee is taking place with other digital content.
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as darren gersh reports, two of the world's biggest companies, apple and google, want to lead the way. >> reporter: open or closed? now publishers have a choice. yesterday apple offered publishers a chance to sell subscriptions through apple's tightly controlled app store-- it's the same model used by newscorp's recently launched ipad newspaper "the daily." google responded today with a much more open system dubbed google one pass. >> reporter: one pass makes it easier for everyone to get the quality journalism they value. >> reporter: google lets publishers set prices, control terms and offer content on tablets, phones or the web. analyst ned may says google's goal is clear. >> they are addressing and placating the concerns of publishers by saying "here is an alternative approach, we're going to play nicer and better." >> reporter: by throwing the doors wide, google hopes to appeal to more developers and content providers. as more companies write software for google platforms, the hope is more customers will find a
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reason to switch from iphones and ipads to androids. but there are risks. >> it is saying "improvise, innovate, let's get creative." that creativity and innovation gets messy. and in a new technology market that can be challenging. >> reporter: apple is acting as a gatekeeper, providing a seamless user experience but controlling subscriber information and refusing to allow links outside an app to websites like amazon or netflix. on top of that, industry analyst ross rubin says apple is charging publishers a hefty 30% for each new subscriber apple brings to the table. >> the apple system may help smaller publishers gain subscribers, but larger publishers feel that they are doing much more to get subscribers outside of apple's products, and therefore feel they shouldn't have to pay that 30%. >> reporter: if they go to
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google, they'll only pay 10%. the battle to sell digital content is another example of how apple and google are becoming fierce frenemies. sometimes cooperating, more of lately competing. darren gersh, "nightly business report," washington. >> susie: borders today filed for chapter 11 bankruptcy
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protection, and said it plans to close the book on 30% of its locations, or about 200 stores. today's filing gives the second- largest u.s. bookstore chain a chance to fix its finances. borders sales have been hurt as buyers increasingly go online rather than visit huge bookstores. the company says it will honor gift cards and rewards with its customer loyalty programs. tom, the n.y.s.e. suspended trading in borders shares today and said it was moving to de- list the stock. borders shares last traded yesterday at 23 cents each. >> tom: it was just 23 months ago when the s&p 500 hit its ominous low of 666.
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today it was the second of the three major indices to double from its recession bottom. since the lows hit in march 2009, the dow industrials has risen almost 90%, but that makes it the laggard of the big three. the nasdaq has more than doubled. and with today's gain, the s&p has doubled. a 100% gain. energy was back in the lead today, with halliburton as the biggest gainer-- adding more than 4%. yes, another 52-week high. crude oil prices rebounded today from their 2011 low. also helping halliburton were positive analyst comments. oil refiner tesoro continues to heat up. take a look at this nice rally. shares jumped almost another 4% today. volume continues to be strong on this up-swing to a new 52-week high. as crude oil prices have dropped recently, that may improve the margins for may of these
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refiners. not all was up for energy though. independent energy firm devon lost more than 2%, continuing this short-term trend lower. earnings beat the street, but were down from a year ago due to lower prices. the effort by industrial gas company air products to buy its competitor air-gas looks to be over finally. shares responded by jumping almost 5%, leading the material sector. air products had wanted to buy airgas for $70. but airgas sued and a judge in delaware this week called the offer "clearly inadequate." airgas, effectively the winner, saw a smaller reaction-- up just 1%. this is family dollar, get there in a moment. and below what was the buyout price. meantime, a new deal in the making for family dollar.
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investor nelson peltz offered between $55 and $60 per share. that sent f-d-o share flying, up more than 20%. volume was big too. the offer led investors looking for other discount retail stocks. dollar general jumped 10%. fred's was up 7%. and dollar tree gained 3%. one more note from retailing, household item rental store aaron's shot up 17% thanks to a big pop in its fourth quarter profits. new 52-week high, nice move, big volume. after the close, graphic semiconductor maker nvidia turned in its latest financial report card. expectations were high just given the move we've seen off the low. just witness the sharp run-up in the stock since the beginning of the year. shares are up more than 50% since january first. anticipation has been building for a new processor that will go in tablets and smartphones. earnings came in well above estimates. revenues were just a tad below expectations. still, it expects top-line
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growth of 6% to 8% this quarter compared to the last quarter. finally, a couple of food stories. dean foods reports the milk business is stabilizing. shares added 6.5%. and deere's quarterly profit doubled. the stock added 2% to a new 52- week high. and that's tonight's "market focus." with the commodity rally continuing to grow, so is investor interest in how to play the bull run.
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tonight's "street critique" guest has a health care play of sorts-- for commodities. she's hilary kramer, editor of gamechangerstocks.com. interesting combination here, livestock health care with animal health international, nice to see you again. this is a company that sells drugs, vaccines and other supplies. it's a microcap company. what makes you like ahii? >> tom, this is a great way to play the global commodities boost. animal health, ahii, provides these medications and anti-parasites and equipment for the hog farmers, the cattle herders, the sheep farmers, and this is a $3.80 stock, it's finally been moving, but could rape double from here. and the reason is that finally these herders have the incentive and they have the money to want to keep their animals really healthy, and then match that with the consumer $2 billion consumer pet business, and that is on fire even in a recessionary environment.
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>> tom: rehave seen livestock prices rise recently as well. let's get to the updates from the inbox, a couple e-mails on a chinese stock you mentioned a few weeks ago, david d. writing you mentioned npd recently, it has moved down since. would you double down? sam asks more trouble ahead? this was a china nepstar drugstore. you liked it back on january 5 of this year. and it has been moving lower. do you still like it? >> with a dividend in the area of 5%, you're being paid to wait. and china has 129 billion dollar health care reform package, and part of that is medication, and to try to pry the consumer in china, instead off the the hospital for their medications and their drugs, to drug stores. china nepstar npd is the wall greens rite aid of china, and remember all the chinese stocks pulled back. it's a great opportunity to buy some china companies that are under valued now.
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>> tom: so you're still holding npd? >> yes. >> tom: eric writes, i never try to miss your appearance as on n. b. r.. other than hugh man, a i haven't noticed health insurers covering trans1 spinal treatment. near-term price target? you liked it back on january 13 when it was trading at 2.82, tonight at 3.406789 it's had a nice rally. >> well, trans1 could rally a lot more, because only one of the major insurers has stepped up and said i'm going to reimburse for this procedure. once one like humana says they'll go for reimbursement, all the rest have to follow and fall in line. so we'll see more of that, a $5 target from there. >> tom: please have hillary address metalico, this is a long-time pick of yours going back to august 22 of 2007. quite a ride, essentially from
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6 up to almost 7 and back down again. do you still like it? >> i love metalico right here, all the strap metal recyclers are really in play right now. this is a smaller one, so you could see some m and a along the way, but metalico themselves has been acquiring companies. but you'll see them eventually be acquired, and that's the play. >> tom: okay. disclosures tonight? you still own all of the ones we mentioned? >> yes, i own these stocks, these are in my portfolio. you can follow the blog, nbr on pbs.org. you can e-mail us, streetcritique@nbr.com. or you can send us a note via twitter at my feed, @hudsonnbr, or nbr's feed. and facebook too. we'll feature some of your questions next wednesday. our guest for this evening's "street critique" is hilary kramer with gamechangerstocks.com. >> susie: here's what we're watching for tomorrow: quarterly results from apache, pride international and waste
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management. also, weekly jobless claims and january reports on consumer prices and leading indicators. and, e.t.f.s or mutual funds? which type of investment is right for you? we'll give you the pros and cons to help you make the best choice. >> susie: a first in the fight against counterfeit cigarettes. altria's philip morris unit is suing seven chinese online retailers, accusing them of selling fake versions of its marlboro cigarettes. the company wants those sales stopped and it wants the people selling the fakes to turn over their profits and pay damages. altria's also suing eight retailers in the los angeles area. it claims they recently sold counterfeit versions of marlboro cigarettes. >> tom: thanks, but no thanks. that's what florida's republican governor rick scott said to $2 billion in stimulus money to build a high-speed railway in his state. scott is worried about potential cost overruns and says florida taxpayers can't afford it. the move was a surprise to supporters of the project, who've already spent $66 million
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on it. scott's decision means the federal money will likely be re- routed to california and other states investing in a high-speed rail network. >> tom: you may not recognize the name yum brands, but you certainly know its restaurants. taco bell, pizza hut and k.f.c. and so do billions of customers in china, where yum brands was among the first and fastest growing western companies. this is one of the stories in
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the march issue of "bloomberg markets" magazine, which is on newstands now. i spoke with senior writer bill mellor, and began by asking how k.f.c. in china is different than k.f.c. in america. >> well, if you were in china and you walked down the avenue of eternal peace and you see a k. f. c., it will look very similar from the outside. but if you walk inside and go up to the counter or take a look at what the people are eating, you'll see it's a completely different operation. and you'll see people eating, sure, you'll see them eating fried chicken, but you'll also see them eating something called joe, which is a kind of rice gruel with ingredients such as 1,000-year-old egg inside. you'll see them eating a thing called a dragon twister, which is kind of a peking duck sauce thing, the men you is completely different and that's why they've been so
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successful. >> tom: so adapting to what the native taste buds are like. yum has expanded quickly in china, you detail this in the magazine. it now has 10% of its restaurants in chin a. what's the goal ultimately for the footprint? >> they think they can get to about 20,000 restaurants. but by 2015 they'll be getting something like half their profit from china. they're doing much, much better in china than mcdonald's. in the u.s., k. f. c. also ranks them at mcdonald's, in china they are dominant. and they are growing at an extraordinary pace. they're opening one new restaurant every 18 hours. >> tom: unbelievable. you mentioned the profits, and in terms of beating the bol line already china is responsible for almost, what, about a third or rather about a half of profits for yum brands. why is that? why are the profits in china so much more?
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>> the margins, the margins are greater for a start. and just the absolute dominance in the sector. i think china has been a graveyard for many western companies, especially in the early days. but yum got it absolutely right. they had the first mover advantage, they've been in there since 198 1k37 they hired local staff, and they empowered them. and i think that's the difference between the yum brand story and the story of other u.s., especially consumer companies, who run into deep trouble in china. >> tom: and bill it's not just the new store growth that's fueling k. f. c. and yum brands, because sales continue at a really blistering growth pace from existing restaurants, in the third quarter double digit growth rate in china compared to essentially flat in the u.s.. you mentioned some of the lessons for yum brands. what else can western firms
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learn from its success? >> many western companies going into china will hire, they'll hire managers with chinese connections, say american born chinese or chinese from other southeast asian countries such as singapore. what yum brands did that was different was they went to taiwan, which is a country which is sort of western in many ways and has experience in fast food, but the culture is very much like main land china. they speak mandarin chinese, which is the main language of china, where as many chinese from the u.s. speak regional dialects. >> tom: you can read more of bill's story in the latest bloomberg markets magazine on news stands now. >> susie: it's time to get out your pencils, paper and a calculator and get busy preparing your 2010 federal income tax return. its due at the i.r.s. in two months.
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and we're here to help. all this week, kevin mccormally offers tips to get you started. he's editorial director at "kiplinger's personal finance." now in tonight's tax tips, figuring out your investment gains and losses. >> this is the year a new rule goes into effect to require brokers to keep track of the tax basis of the stocks and bonds you own. as you know, you compare that amount to what you get when you sell to see if you have a taxable gain or a tax-saving loss. what a blessing to have the figure reported on a single form, rather than having to reconstruct it by rifling through what could be years of records. but don't breathe a sigh of relief just yet. you see, the new basis reporting rule applies only to stocks and bonds purchased starting this year. and it will only apply to mutual funds purchased in 2012 and later years. i like the new rule because it should prevent investors from overpaying their taxes. now the i.r.s. likes it too because it will also make it tougher to underpay. you see, the agency will get a
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copy of that basis-tracking form too. but for the 2010 return you're working on now, you're still on your own. if you sold securities or redeemed mutual funds in a taxable account last year, you need to report each sale on schedule "d." you should get a 1099 form by the end of this month showing the proceeds of the sale. but it's up to you-- and your records-- to know how much you paid. you are in particular jeopardy of overpaying your tax if you sold a mutual fund in which you had regularly reinvested dividends. remember, each and every one of those reinvestments increased your basis in the fund. if you can't pinpoint your basis, call the fund for help. many track an investor's average basis. now that's not necessarily the best way to figure your tax bill, but it beats overpaying your taxes by understating your basis. i'm kevin mccormally. >> susie: did you inherit stocks, bonds or other property last year? tomorrow, kevin helps you tackle the tax on those items. if you have a question you want kevin to answer, he'll be happy to do that. just log on to our website, nbr on pbs.org.
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>> tom: that's "nightly business report" for wednesday, february 16. i'm tom hudson. good night everyone, and good night to you too, susie. >> susie: good night tom. i'm susie gharib. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
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tonight on "quest" -- nature lovers know how valuable it is to get outside. find out why some researchers are suggesting it may actually be necessary for humans to spend time in nature. and it's one thing to think outside the box. but one look at ugo conti's
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proteus and you'll realize this is an inventor who's never even seen the box. major funding for "quest" is provided by the national science foundation, the gordon and betty moore foundation -- investing in partnerships for environmental conservation, science and the san francisco bay area, the richard and rhoda goldman foundation -- celebrating more than 50 years of innovative grantmaking and the amgen foundation. additional support provided by -- the william k. bowes, jr. foundation, anne s. bowers -- the robert noyce trust, the dirk and charlene kabcenell foundation and the vadasz family foundation. support is also provided

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